2010 (4) TMI 1098 - AT - Income Tax

Summary

Issues involved: The judgment involves the issue of whether certain charges towards freight and insurance should be excluded from the total turnover while calculating the deduction u/s 10B of the Income Tax Act.

Summary of Judgment:

Issue 1: Exclusion of freight and insurance charges from turnover calculation

The assessee, a company, filed an appeal against the order of CIT(A) regarding the exclusion of charges towards freight and insurance from the total turnover for the purpose of calculating deduction u/s 10B of the Income Tax Act. The Assessing Officer had excluded these charges from the export turnover but not from the total turnover, leading to a discrepancy in the deduction calculation.

Details:
- The assessee claimed deduction u/s 10B based on both export turnover and total turnover.
- The Assessing Officer reduced the charges from the export turnover but not from the total turnover, affecting the deduction calculation.
- The assessee argued that similar deductions in other sections of the Act support the exclusion of these charges from the total turnover.
- The CIT(A) upheld the Assessing Officer's decision, deviating from previous Tribunal decisions favoring the exclusion of such charges from total turnover.

Decision:
- The Tribunal, citing previous decisions and the Special Bench ruling, ruled in favor of the assessee.
- It emphasized maintaining parity between export turnover and total turnover in sections encouraging foreign exchange earnings.
- The Tribunal directed the Assessing Officer to exclude the freight and insurance charges from both export and total turnover while calculating the deduction u/s 10B.

Conclusion:
The Tribunal allowed the appeal, overturning the decisions of the lower authorities and directing the exclusion of the charges from turnover calculations for deduction u/s 10B.